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Hazelwood closure to push up power prices

AAP logoAAP 2/11/2016 Julian Drape

When the Hazelwood power plant closes in early 2017 retail electricity prices will rise by less than four per cent - or $1 a week - according to Victorian government modelling.

But other experts suggest prices will jump around 10 per cent in the longer term.

"It's not going to be a small rise," Frontier Economics managing director Danny Price told AAP on Thursday.

He cites as an example what happened in South Australia when Alinta closed its Northern Power Station earlier this year.

It provided eight per cent of SA's electricity and the shutdown resulted in an initial price hike of 30 per cent that's settling at "more than 10 per cent".

Hazelwood, by comparison, generates more than 20 per cent of Victoria's power.

"The government is assuming other generators will fill the gap, and that's the case, but that's forgetting you're losing a competitor," Mr Price said.

"If you lose a major competitor from any market, prices change."

Victorian Energy Minister Lily D'Ambrosio says the government's predicted four per cent rise is relatively small.

But she also acknowledges Victorian families are "already doing it tough" so it'll be noticed.

Federal Energy Minister Josh Frydenberg says the first peak period after Hazelwood closes will be in early 2018.

That means the market will have 15 months to respond.

"The expectation is that Victoria will import more black coal-generated power from NSW and indeed some hydro-generated power from Tasmania," he told reporters in Melbourne.

"More supply will come into the market (too) and that could take the form of either gas or renewables."

The state government says Victoria's installed energy capacity will continue to exceed peak demand requirements.

"As it does now Victoria will continue to import or export power depending on national electricity market conditions, such as the price of electricity in other states," a spokesman for Ms D'Ambrosio said on Thursday.

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